<PAGE>
As filed with the Securities and Exchange Commission on May 26, 2000
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-------------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Initial Depositor
(Exact name of registrant as specified in charter)
-------------------
ABC HOLDRS/SM/ Trust 2000-H
yet-to-be formed
[Issuer with respect to the receipts]
<TABLE>
<S> <C> <C>
Delaware 6211 13-5674085
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
250 Vesey Street
New York, New York 10281
(212) 449-1000
(Address, including zip code, and telephone number, including area code, of
registrant's
principal executive offices)
Andrea L. Dulberg, Esq. Copies to:
Corporate Secretary Andrew B. Janszky
Merrill Lynch, Pierce, Fenner & Smith Incorporated Shearman & Sterling
250 Vesey Street 599 Lexington Avenue
New York, New York 10281 New York, New York 10022
(212) 449-1000 (212) 848-4000
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to Be Offering Price Aggregate Offering Amount of
Securities to Be Registered Registered Per Receipt(1) Price(1) Registration Fee(2)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ABC HOLDRS .......... 100,000 $100 $10,000,000 $2,640
shares
============================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act.
(2) This Registration Statement also registers, where required, an
indeterminate amount of securities to be sold by Merrill Lynch, Pierce,
Fenner & Smith Incorporated in market-making transactions.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to such
Section 8(a), may determine.
==============================================================================================================
</TABLE>
<PAGE>
The information in this prospectus is not complete and may be changed. We have
filed a registration statement relating to these receipts with the Securities
and Exchange Commission. We cannot sell these receipts until the registration
statement becomes effective. This prospectus is not an offer to sell these
receipts and we are not soliciting offers to buy these receipts in any state
where such offer or sale is not permitted.
PROSPECTUS
- ----------
Subject to Completion
Preliminary Prospectus dated May 26, 2000
[LOGO]
[ ] Depositary Receipts
ABC HOLDRS/SM/ Trust 2000-H
The ABC HOLDRS/SM/ Trust 2000-H will issue Depositary Receipts called ABC
HOLDRS/SM/ representing your undivided beneficial ownership in the U.S.-traded
common stock of a group of specified companies that are involved in various
segments of the [ ] industry. The Bank of New York will be the
trustee. You only may acquire, hold or transfer ABC HOLDRS in a round-lot
amount of 100 ABC HOLDRS or round-lot multiples. ABC HOLDRS are separate from
the underlying deposited common stocks that are represented by the ABC HOLDRS.
For a list of the names and the number of shares of the companies that make up
an ABC HOLDR, see "Highlights of ABC HOLDRS--The ABC HOLDRS" starting on page 6.
The trust will issue the additional ABC HOLDRS on a continuous basis.
Investing in ABC HOLDRS involves significant risks. See "Risk factors"
starting on page 4.
The initial public offering price for a round-lot of 100 ABC HOLDRS will
equal the sum of the closing market price on the primary trading market on the
pricing date for each deposited share multiplied by the share amount specified
in this prospectus, plus an underwriting fee.
ABC HOLDRS are neither interests in nor obligations of either the initial
depositor, Merrill Lynch, Pierce, Fenner & Smith Incorporated, or The Bank of
New York, as trustee.
Before this issuance, there has been no public market for ABC HOLDRS.
Application has been made to list the ABC Receipts on the American Stock
Exchange under the symbol "[ ].".
- ----------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Initial
Price to Underwriting
Public* Fee
-------- ---
Per ABC HOLDR ................................... 2%
- ----------------------------
* Includes underwriting fee.
For purchases of ABC HOLDRS in excess of ABC HOLDRS, the underwriting fee
will be %.
------------------
Merrill Lynch & Co. [ ]
------------------
The date of this prospectus is , 2000.
"HOLDRS" and "HOLding Company Depositary ReceiptS" are service marks of Merrill
Lynch & Co., Inc.
<PAGE>
TABLE OF CONTENTS
Page
----
Summary.............................................................. 3
Risk Factors......................................................... 4
Highlights of ABC HOLDRS............................................. 6
The Trust............................................................ 12
Description of ABC HOLDRS............................................ 12
Description of the Underlying Securities............................. 13
Description of the Depositary Trust Agreement........................ 15
Federal Income Tax Consequences...................................... 18
ERISA Considerations................................................. 20
Plan of Distribution................................................. 20
Legal Matters........................................................ 22
Where You Can Find More Information.................................. 22
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This prospectus contains information you should consider when making your
investment decision. With respect to information about ABC HOLDRS, you should
rely only on the information contained in this prospectus. We have not
authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not
rely on it. We are not making an offer to sell ABC HOLDRS in any jurisdiction
where the offer or sale is not permitted.
The ABC HOLDRS are not registered for public sale outside of the United
States. Non-U.S. receipt HOLDRS should refer to "Federal Income Tax
Consequences-- Non-U.S. receipt holders" and consult their tax advisors
regarding U.S. withholding and other taxes which may apply to ownership of the
ABC HOLDRS or of the underlying securities through an investment in the ABC
HOLDRS.
<PAGE>
SUMMARY
The ABC HOLDRS trust will be formed under the depositary trust agreement,
dated as of , 2000 among The Bank of New York, as trustee, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, other depositors and the owners of
the ABC HOLDRS. The trust is not a registered investment company under the
Investment Company Act of 1940.
The trust will hold shares of common stock issued by [ ] specified
companies generally considered to be involved in various segments of the [
] industry. The number of shares of each common stock held by the trust with
respect to each round-lot of ABC HOLDRS is specified under ''Highlights of ABC
HOLDRS--The ABC HOLDRS.'' This group of common stocks is referred to as the
underlying securities. Except when a reconstitution event occurs, the
underlying securities will not change.
Under no circumstances will a new company be added to the group of issuers
of underlying securities.
The trust will issue ABC HOLDRS that represent your undivided beneficial
ownership interest in the shares of common stock held by the trust on your
behalf. The ABC HOLDRS are separate from the underlying common stocks that are
represented by the ABC HOLDRS.
3
<PAGE>
RISK FACTORS
An investment in ABC HOLDRS involves risks similar to investing in each of
the underlying securities outside of the ABC HOLDRS, including the risks
associated with concentrated investments in the [ ] industry.
General Risk Factors
. Loss of investment. Because the value of ABC HOLDRS directly relates to the
value of the underlying securities, you may lose all or a substantial
portion of your investment in the ABC HOLDRS if the underlying securities
decline in value.
. Discount trading price. ABC HOLDRS may trade at a discount to the aggregate
value of the underlying securities.
. Not necessarily representative of the [ ] industry. While the
underlying securities are common stocks of companies generally considered
to be involved in various segments of the [ ] industry, the
underlying securities and the ABC HOLDRS may not necessarily follow the
price movements of the entire [ ] industry generally. If the
underlying securities decline in value, your investment in the ABC HOLDRS
will decline in value even if common stock prices in the [ ]
industry generally increase in value. Furthermore, after the initial
deposit, one or more of the issuers of the underlying securities may no
longer be involved in the [ ] industry. In this case, the ABC
HOLDRS may no longer consist of securities issued only by companies
involved in the [ ] industry.
. No investigation of underlying securities. The underlying securities
included in the ABC HOLDRS were selected by Merrill Lynch, Pierce, Fenner &
Smith Incorporated based on the market capitalization of issuers and the
market liquidity of common stocks in the [ ] industry, without
regard for the value, price performance, volatility or investment merit of
the underlying securities. Consequently, the ABC HOLDRS trust, the trustee,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, and their affiliates,
have not performed any investigation or review of the selected companies,
including the public filings by the companies. Investors and market
participants should not conclude that the inclusion of a company is any
form of investment recommendation by the trust, the trustee, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, or their affiliates.
. Loss of diversification. As a result of business developments,
reorganizations, or market fluctuations affecting issuers of the underlying
securities, ABC HOLDRS may not necessarily continue to be a diversified
investment in the [ ] industry. As a result of market fluctuation
and/or reconstitution events, ABC HOLDRS may represent a concentrated
investment in one or more of the underlying securities which would reduce
investment diversification and increase your exposure to the risks of
concentrated investments.
. Conflicting investment choices. In order to sell one or more of the
underlying securities individually or to participate in a tender offer
relating to one or more of the underlying securities, you will be required
to cancel your ABC HOLDRS and receive delivery of each of the underlying
securities. The cancellation of your ABC HOLDRS will allow you to sell
individual underlying securities or to deliver individual underlying
securities in a tender offer. The cancellation of ABC HOLDRS will involve
payment of a cancellation fee to the trustee.
. Trading halts. Trading in ABC HOLDRS may be halted if trading in one or
more of the underlying securities is halted. If trading is halted in the
ABC HOLDRS, you will only be able to trade HOLDRS if you cancel your ABC
HOLDRS and receive the underlying securities, even though there is trading
in some of the underlying securities.
4
<PAGE>
. Delisting from the American Stock Exchange. If the number of companies
whose common stock is held in the trust falls below nine, the American
Stock Exchange may consider delisting the ABC HOLDRS. If the ABC HOLDRS
are delisted by the American Stock Exchange, a termination event will
result unless the ABC HOLDRS are listed for trading on another national
securities exchange or through Nasdaq within five business days from the
date the ABC HOLDRS are delisted.
. Possible conflicts of interest. Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as initial depositor, has selected the underlying securities
and may face possible conflicts of interest in connection with its
activities. For example, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and its affiliates, collectively referred to as Merrill Lynch,
may engage in investment banking and other activities, may provide services
to issuers of the underlying securities in connection with its business, or
may make purchases or sales, including establishing long or short
positions, in the underlying securities for its own account. In addition,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor,
will purchase, in the secondary market, the underlying securities that will
be deposited into the trust. Merrill Lynch may make these purchases before
the deposit into the trust, to it may borrow securities for the deposit and
subsequently purchase the securities to repay to the lenders the securities
previously borrowed. In either event, the purchases of the underlying
securities will be made at various prices. As the initial offering price
for the ABC HOLDRS will be based on the closing market price of each of the
underlying securities on the pricing date, Merrill Lynch may recognize a
gain on its purchases of the underlying securities. Specifically, if the
closing market price for the underlying securities on the pricing date is
higher than the price at which Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as initial depositor, purchases the underlying securities
then it will recognize a gain in connection with such purchases. Merrill
Lynch may recognize this gain on any of the underlying securities that
comprise the ABC HOLDRS or on all of the underlying securities in the
aggregate. The potential profit of Merrill Lynch is also affected by any
hedging activities that it may engage in while it purchases the underlying
securities in the secondary market for deposit into the trust. All of
these activities may result in conflicts of interest with respect to the
financial interest of Merrill Lynch, on the one hand, and, on the other
hand, the initial selection of the underlying securities included in the
ABC HOLDRS, the selection of the [ ] industry, Merrill Lynch's
activity in the secondary market in the underlying securities, and the
creation and cancellation of ABC HOLDRS by Merrill Lynch.
. Temporary price increases in the underlying securities. Purchasing
activity in the secondary trading market associated with acquiring the
underlying securities for deposit into the trust may temporarily increase
the market price of the deposited shares, which will result in a higher
initial offering price for the ABC HOLDRS. Large volumes of purchasing
activity, which may occur in connection with the issuance of ABC HOLDRS,
particularly in connection with the initial issuance of ABC HOLDRS, could
temporarily increase the market price of the underlying securities,
resulting in a higher price on that date. This purchasing activity could
create a temporary imbalance between the supply and demand of the
underlying securities, thereby limiting the liquidity of the underlying
securities due to a temporary increased demand for underlying securities.
Temporary increases in the market price of the underlying securities may
also occur as a result of the purchasing activity of other market
participants. Other market participants may attempt to benefit from
increases in the market price of the underlying securities that may occur
as result of the increased purchasing activity in the underlying securities
resulting from the issuance of the ABC HOLDRS. Consequently, prices for
the underlying securities may decline immediately after the pricing date.
If the trading prices for the underlying securities decline, the trading
price of ABC HOLDRS will also decline.
Risk Factors Specific to the [ ] Industry
5
<PAGE>
HIGHLIGHTS OF ABC HOLDRS
This discussion highlights information regarding ABC HOLDRS. We present
certain information more fully in the rest of this prospectus. You should read
the entire prospectus carefully before you purchase ABC HOLDRS.
Issuer................. ABC HOLDRS Trust.
The trust.............. The ABC HOLDRS Trust will be formed under the
depositary trust agreement, dated as of ,
2000 among The Bank of New York, as trustee, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, other
depositors and the owners of the ABC HOLDRS. The trust
is not a registered investment company under the
Investment Company Act of 1940.
Initial depositor...... Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Trustee................ The Bank of New York, a New York state-chartered
banking organization, will be the trustee and receive
compensation as set forth in the depositary trust
agreement.
Purpose of ABC HOLDRS.. ABC HOLDRS are designed to achieve the following:
Diversification. ABC HOLDRS are designed to allow you
to diversify your investment in the [ ]
industry through a single, exchange-listed instrument
representing your undivided beneficial ownership of
the underlying securities.
Flexibility. The beneficial owners of ABC HOLDRS have
undivided beneficial ownership interests in each of
the underlying securities represented by the ABC
HOLDRS, and can cancel their ABC HOLDRS to receive
each of the underlying securities represented by the
ABC HOLDRS.
Transaction costs. The expenses associated with
trading ABC HOLDRS are expected to be less than
trading each of the underlying securities separately.
Trust assets........... The trust will hold shares of common stock issued by
specified companies in the [ ] industry.
Except when a reconstitution event occurs, the group of
companies will not change. Reconstitution events are
described in this prospectus under the heading
''Description of the depositary trust agreement--
Reconstitution events.'' Under no circumstances will
the common stock of a new company be added to the
common stocks underlying the ABC HOLDRS.
The trust's assets may increase or decrease as a
result of in-kind deposits and withdrawals of the
underlying securities during the life of the trust.
The ABC HOLDRS......... The trust will issue ABC HOLDRS that represent your
undivided beneficial ownership interest in the shares
of U.S.-traded common stock
6
<PAGE>
held by the trust on your behalf. The ABC HOLDRS
themselves are separate from the underlying securities
that are represented by the ABC HOLDRS.
The specific share amounts for each round-lot of 100
ABC HOLDRS will be determined on the pricing date so
that the initial issue price will be approximately
$90-$100 per ABC HOLDR and the initial weightings of
each underlying security included in the ABC HOLDRS
approximates the relative market capitalizations of
the specified companies (based on the closing market
prices of the underlying securities on the trading day
immediately preceding the pricing date), subject to a
maximum weight of 20%. For purposes of this
preliminary prospectus, the indicative share amounts
and the indicative weightings of each underlying
security, based on market capitalizations as of the
date of this preliminary prospectus, are set forth in
the table below; however, such share amounts and
weightings are expected to change during the period
between the date of this preliminary prospectus and
the pricing date.
After the pricing date, the share amounts will not
change, except for changes due to corporate events,
such as stock splits or reverse stock splits on the
underlying securities, or reconstitution events.
However, the weightings are expected to change
substantially over time because of price fluctuations.
The following chart provides the
. names of the [ ] issuers of the underlying
securities represented by the ABC HOLDRS,
. stock ticker symbols,
. indicative share amounts represented by a round-
lot of 100 ABC HOLDRS as of the date of this
preliminary prospectus,
. percentage of market capitalization as of the date
hereof, and
. principal market on which the shares of common
stock of the selected companies are traded.
<TABLE>
<CAPTION>
Indicative Primary
Share Indicative Trading
Name of Company Ticker Amounts Weightings Market
--------------- ------ ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
</TABLE>
7
<PAGE>
These companies generally are considered to be [ ]
of the larges and most liquid companies with U.S.-
traded common stock involved in the [ ] industry
as measured by market capitalization and trading
volume on , 2000. The market capitalization of a
company is determined by multiplying the price of
its common stock by the number of outstanding
shares of its common stock.
The trust only will issue and cancel, and you only
may obtain, hold, trade or surrender, ABC HOLDRS
in a round-lot of 100 ABC HOLDRS and round-lot
multiples. The trust will only issue ABC HOLDRS
upon the deposit of the whole shares represented
by a round-lot of 100 ABC HOLDRS. In the event
that a fractional share comes to be represented by
a round-lot of ABC HOLDRS, the trust may require a
minimum of more than one round-lot of 100 ABC
HOLDRS for an issuance so that the trust will
always receive whole share amounts for issuance of
ABC HOLDRS.
The number of outstanding ABC HOLDRS will increase
and decrease as a result of in-kind deposits and
withdrawals of the underlying securities. The
trust will stand ready to issue additional ABC
HOLDRS on a continuous basis when an investor
deposits the required shares of common stock with
the trustee.
Public offering price...... The initial public offering price for 100 ABC
HOLDRS will equal the sum of the closing market
price on the primary trading market on the pricing
date for each underlying security multiplied by
the share amount to be determined on the pricing
date, plus an underwriting fee. It is expected
that the initial public offering price will be
approximately $90-$100 per ABC HOLDR.
Purchases.................. After the initial offering, you may acquire ABC
HOLDRS in two ways:
. through an in-kind deposit of the required
number of shares of common stock of the
underlying issuers with the trustee, or
. through a cash purchase in the secondary
trading market.
Underwriting fees.......... If you purchase ABC HOLDRS in the initial public
offering, you will pay Merrill Lynch, Pierce,
Fenner & Smith Incorporated, in its role as
underwriter, an underwriting fee equal to:
. For purchases of ABC HOLDRS or fewer, 2%.
. For purchases in excess of ABC HOLDRS, %.
You will not be charged any issuance fee or other
sales commission in connection with purchases of
ABC HOLDRS made in the initial public offering.
Issuance and cancellation
fees....................... After the initial offering, if you wish to create
ABC HOLDRS by delivering to the trust the
requisite shares of common stock represented by a
round-lot of 100 ABC HOLDRS, The Bank of New York
as
8
<PAGE>
trustee will charge you an issuance fee of
up to $10.00 for each round-lot of 100 ABC
HOLDRS. If you wish to cancel your ABC
HOLDRS and withdraw your underlying
securities, The Bank of New York as trustee
will charge you a cancellation fee of up to
$10.00 for each round-lot of 100 ABC HOLDRS.
Commissions....................... If you choose to deposit underlying
securities in order to receive ABC HOLDRS
after the conclusion of the initial public
offering, you will not be charged the
underwriting fee. However, in addition to
the issuance fee charged by the trustee
described above, you will be responsible for
paying any sales commission associated with
your purchase of the underlying securities
that is charged by your broker, whether it
be Merrill Lynch & Co. or [ ],
collectively the selling group, or another
broker .
Custody fees...................... The Bank of New York, as trustee and as
custodian, will charge you a quarterly
custody fee of $2.00 for each round-lot of
100 ABC HOLDRS, to be deducted from any cash
dividend or other cash distributions on
underlying securities received by the trust.
With respect to the aggregate custody fee
payable in any calendar year for each ABC
HOLDR, the Trustee will waive that portion
of the fee which exceeds the total cash
dividends and other cash distributions
received, or to be received, and payable
with respect to such calendar year.
Rights relating to
ABC HOLDRS....................... You have the right to withdraw the
underlying securities upon request by
delivering a round-lot or integral multiple
of a round-lot of ABC HOLDRS to the trustee,
during the trustee's business hours, and
paying the cancellation fees, taxes, and
other charges. You should receive the
underlying securities no later than the
business day after the trustee receives a
proper notice of cancellation. The trustee
will not deliver fractional shares of
underlying securities. To the extent that
any cancellation of ABC HOLDRS would
otherwise require the delivery of a
fractional share, the trustee will sell such
share in the market and the trust, in turn,
will deliver cash in lieu of such share.
Except with respect to the right to vote for
dissolution of the trust, the ABC HOLDRS
themselves will not have voting rights.
Rights relating to the underlying
securities....................... You have the right to:
. Receive all shareholder disclosure
materials, including annual and
quarterly reports, distributed by the
issuers of the underlying securities.
. Receive all proxy materials distributed
by the issuers of the underlying
securities and will have the right to
instruct the trustee to vote the
underlying securities or may attend
shareholder meetings yourself.
. Receive dividends and other
distributions on the underlying
securities, if any are declared and
paid to the trustee by an
9
<PAGE>
issuer of the underlying securities,
net of any applicable taxes or fees.
If you wish to participate in a tender offer
for underlying securities, you must obtain the
underlying securities by surrendering your ABC
HOLDRS and receiving all of your underlying
securities. For specific information about
obtaining your underlying securities, you
should read the discussion under the caption
''Description of the depositary trust
agreement.''
Reconstitution events......... A. If an issuer of underlying securities no
longer has a class of common stock
registered under section 12 of the
Securities Exchange Act of 1934, then its
securities will no longer be an underlying
security and the trustee will distribute
the shares of that company to the owners
of the ABC HOLDRS.
B. If the SEC finds that an issuer of
underlying securities should be registered
as an investment company under the
Investment Company Act of 1940, and the
trustee has actual knowledge of the SEC
finding, then the trustee will distribute
the shares of that company to the owners
of the ABC HOLDRS.
C. If the underlying securities of an issuer
cease to be outstanding as a result of a
merger, consolidation or other corporate
combination, the trustee will distribute
the consideration paid by and received
from the acquiring company to the
beneficial owners of ABC HOLDRS, unless
the merger, consolidation or other
corporate combination is between companies
that are already included in the ABC
HOLDRS and the consideration paid is
additional underlying securities. In this
case, the additional underlying securities
will be deposited into the trust.
D. If an issuer's underlying securities are
delisted from trading on a national
securities exchange or Nasdaq and are not
listed for trading on another national
securities exchange or through Nasdaq
within five business days from the date
such securities are delisted.
If a reconstitution event occurs, the
trustee will deliver the underlying
security to you as promptly as practicable
after the date that the trustee has
knowledge of the occurrence of a
reconstitution event.
Termination events............ A. The ABC HOLDRS are delisted from the
American Stock Exchange and are not listed
for trading on another national securities
exchange or through Nasdaq within five
business days from the date the ABC HOLDRS
are delisted.
B. The trustee resigns and no successor
trustee is appointed within 60 days from
the date the trustee provides notice to
Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as initial depositor, of its
intent to resign.
10
<PAGE>
C. 75% of beneficial owners of outstanding
ABC HOLDRS vote to dissolve and liquidate
the trust.
If a termination event occurs, the trustee will
distribute the underlying securities to you as
promptly as practicable after the termination
event.
Federal income
tax consequences........... The federal income tax laws will treat a U.S.
holder of ABC HOLDRS as directly owning the
underlying securities. The ABC HOLDRS
themselves will not result in any federal tax
consequences separate from the tax consequences
associated with ownership of the underlying
securities.
Listing..................... Application has been made to list the ABC
HOLDRS on the American Stock Exchange under the
symbol ''[ ]''. Trading will take place only in
round-lots of 100 ABC HOLDRS and round-lot
multiples. A minimum of 150,000 ABC HOLDRS will
be required to be outstanding when trading
begins.
Trading..................... Investors only will be able to acquire, hold,
transfer and surrender a round-lot of 100 ABC
HOLDRS. Bid and ask prices, however, will be
quoted per single ABC HOLDRS.
Clearance and settlement.... The trust will issue ABC HOLDRS in book-entry
form. ABC HOLDRS will be evidenced by one or
more global certificates that the trustee will
deposit with The Depository Trust Company,
referred to as DTC. Transfers within DTC will
be in accordance with DTC's usual rules and
operating procedures. For further information
see ''Description of ABC HOLDRS.''
11
<PAGE>
THE TRUST
General. This discussion highlights information about the ABC HOLDRS
trust. You should read this information, information about the depositary trust
agreement as well as the depositary trust agreement before you purchase ABC
HOLDRS. The material terms of the depositary trust agreement are described in
this prospectus under the heading ''Description of the depositary trust
agreement.''
The ABC HOLDRS trust. The trust will be formed pursuant to the depositary
trust agreement, dated as of , 2000. The Bank of New York will
be the trustee. The ABC HOLDRS trust is not a registered investment company
under the Investment Company Act of 1940.
The ABC HOLDRS trust is intended to hold deposited shares for the benefit
of owners of ABC HOLDRS. The trustee will perform only administrative and
ministerial acts. The property of the trust will consist of the underlying
securities and all monies or other property, if any, received by the trustee.
The trust will terminate on December 31, 2040, or earlier if a termination event
occurs.
DESCRIPTION OF ABC HOLDRS
The trust will issue ABC HOLDRS under the depositary trust agreement
described in this prospectus under the heading ''Description of the depositary
trust agreement.'' After the initial offering, the trust may issue additional
ABC HOLDRS on a continuous basis when an investor deposits the requisite
underlying securities with the trustee.
You may only acquire, hold, trade and surrender ABC HOLDRS in a round-lot
of 100 ABC HOLDRS and round-lot multiples. The trust will only issue ABC HOLDRS
upon the deposit of the whole shares of underlying securities that are
represented by a round-lot of 100 ABC HOLDRS. In the event of a stock split,
reverse stock split, or other distribution by the issuer of an underlying
security that results in a fractional share becoming represented by a round-lot
of ABC HOLDRS, the trust may require a minimum of more than one round-lot of 100
ABC HOLDRS for an issuance so that the trust will always receive whole share
amounts for issuance of ABC HOLDRS.
ABC HOLDRS will represent your individual and undivided beneficial
ownership interest in the common stock of the specified underlying securities.
The [ ] companies selected as part of this receipt program are listed
above in the section entitled ''Highlights of ABC HOLDRS--The ABC HOLDRS.''
Beneficial owners of ABC HOLDRS will have the same rights and privileges as
they would have if they beneficially owned the underlying securities outside of
the trust. These include the right of investors to instruct the trustee to vote
the common stock, and to receive dividends and other distributions on the
underlying securities, if any are declared and paid to the trustee by an issuer
of an underlying security, as well as the right to cancel ABC HOLDRS to receive
the underlying securities. See ''Description of the depositary trust
agreement.'' ABC HOLDRS are not intended to change your beneficial ownership in
the underlying securities under federal securities laws, including Sections
13(d) and 16(a) of the Securities Exchange Act of 1934.
The trust will not publish or otherwise calculate the aggregate value of
the underlying securities represented by a receipt. ABC HOLDRS may trade in the
secondary market at prices that are lower than the aggregate value of the
corresponding underlying securities. If, in such case, an owner of ABC HOLDRS
wishes to realize the dollar value of the underlying securities, that owner will
have to cancel the ABC HOLDRS. Such cancellation will require payment of fees
and expenses as described in ''Description of the depositary trust agreement--
Withdrawal of underlying securities.''
ABC HOLDRS will be evidenced by one or more global certificates that the
trustee will deposit with DTC and register in the name of Cede & Co., as nominee
for DTC. ABC HOLDRS will be available only in book-entry form. Owners of ABC
HOLDRS may hold their ABC HOLDRS through DTC, if they are participants in DTC,
or indirectly through entities that are participants in DTC.
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<PAGE>
DESCRIPTION OF THE UNDERLYING SECURITIES
Selection criteria. The underlying securities are the common stocks of a
group of [ ] specified companies involved in various segments of the [
] industry and whose common stock is registered under Section 12 of the Exchange
Act. The issuers of the underlying securities are considered to be [ ] of
the largest capitalized, most liquid companies in the [ ] industry as
measured by market capitalization and trading volume. The following criteria
were used in selecting the underlying securities on ,
2000:
. Market capitalization equal to or greater than $__ billion;
. Average daily trading volume of at least ___ million shares over the
60 trading days before , 2000;
. Average daily dollar volume (that is, the average daily trading volume
multiplied by the closing price on , 2000)
of at least $__ million over the 60 trading days before
, 2000; and
. A trading history of at least 90 calendar days.
The market capitalization of a company is determined by multiplying the
price of its common stock by the number of shares of its common stock that are
held by stockholders. In determining whether a company was to be considered for
inclusion in the ABC HOLDRS, Merrill Lynch, Pierce, Fenner & Smith Incorporated
examined available public information about the company, including analysts'
reports and other independent market sources. The ultimate determination of the
inclusion of the [ ] specified companies, however, rested solely within
the discretion of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
After the initial deposit, one or more of the issuers of the underlying
securities may no longer be substantially involved in the [ ] industry.
In this case, the ABC HOLDRS may no longer consist of securities issued by
companies involved in the [ ] industry. Merrill Lynch, Pierce, Fenner
& Smith Incorporated will determine, in its sole discretion, whether the issuer
of a particular underlying security remains in the [ ] industry and
will undertake to make adequate disclosure when necessary.
Underlying securities. For a list of the underlying securities represented
by ABC HOLDRS, please refer to ''Highlights of ABC HOLDRS--The ABC HOLDRS.'' If
the underlying securities change because of a reconstitution event, a revised
list of underlying securities will be set forth in a prospectus supplement and
will be available from the American Stock Exchange and through a widely-used
electronic information dissemination system such as Bloomberg or Reuters.
No investigation. In selecting the underlying securities, the trust, the
trustee, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and any affiliate
of these entities, have not performed any investigation or review of the
selected companies, including the public filings by the companies, other than to
the extent required to determine whether the companies satisfied the program's
stated selection criteria. Accordingly, before you acquire ABC HOLDRS, you
should consider publicly available financial and other information about the
issuers of the underlying securities. See ''Risk Factors'' and ''Where You Can
Find More Information.'' Investors and market participants should not conclude
that the inclusion of a company in the list is any form of investment
recommendation of that company by the trust, the trustee, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, the selling group and any of their affiliates.
General background and historical information.
The following table and graph set forth the composite performance of all of
the underlying securities represented by a single ABC HOLDR based upon the
indicative share amounts set forth in the table on page 10 of
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<PAGE>
this preliminary prospectus, measured at the close of each business day
from , 1999, the first date when all of the underlying securities
were publicly traded, and thereafter as of the end of each month to ,
2000. The performance table and graph data are adjusted for any splits that may
have occurred over the measurement period. Past movements of the underlying
securities are not necessarily indicative of future values. The actual share
amounts will be determined on the pricing date and may differ from the
indicative share amounts.
<TABLE>
<CAPTION>
ABC ABC ABC ABC ABC ABC
1999 HOLDRS 1999 HOLDRS 1999 HOLDRS 1999 HOLDRS 1999 HOLDRS 2000 HOLDRS
- ---- ------ ---- ------- ---- ------ ---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
[GRAPH]
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<PAGE>
DESCRIPTION OF THE DEPOSITARY TRUST AGREEMENT
General. The depositary trust agreement, dated as of , 2000,
among Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Bank of New York,
as trustee, other depositors and the owners of the ABC HOLDRS, provides that ABC
HOLDRS will represent an owner's undivided beneficial ownership interest in the
common stock of the underlying companies.
The trustee. The Bank of New York will serve as trustee. The Bank of New
York, which was founded in 1784, was New York's first bank and is the oldest
bank in the country still operating under its original name. The Bank is a
state-chartered New York banking corporation and a member of the Federal Reserve
System. The Bank conducts a national and international wholesale banking
business and a retail banking business in the New York City, New Jersey and
Connecticut areas, and provides a comprehensive range of corporate and personal
trust, securities processing and investment services.
Issuance, transfer and surrender of ABC HOLDRS. You may create and cancel
ABC HOLDRS only in round-lots of 100 ABC HOLDRS. You may create ABC HOLDRS by
delivering to the trustee the requisite underlying securities. The trust will
only issue ABC HOLDRS upon the deposit of the whole shares represented by a
round-lot of 100 ABC HOLDRS. In the event that a fractional share comes to be
represented by a round-lot of ABC HOLDRS, the trust may require a minimum of
more than one round-lot of 100 ABC HOLDRS for an issuance so that the trust will
always receive whole share amounts for issuance of ABC HOLDRS. Similarly, you
must surrender ABC HOLDRS in integral multiples of 100 ABC HOLDRS to withdraw
deposited shares from the trust. The trustee will not deliver fractional shares
of underlying securities, to the extent that any cancellation of ABC HOLDRS
would otherwise require the delivery of fractional shares, the trust will
deliver cash in lieu of such shares. You may request withdrawal of your
deposited shares during the trustee's normal business hours. The trustee
expects that in most cases it will deliver your deposited shares within one
business day of your withdrawal request.
Voting rights. The trustee will deliver you proxy soliciting materials
provided by issuers of the deposited shares so as to permit you to give the
trustee instructions as to how to vote on matters to be considered at any annual
or special meetings held by issuers of the underlying securities.
Under the depositary trust agreement, any beneficial owner of ABC HOLDRS,
other than Merrill Lynch, Pierce, Fenner & Smith Incorporated, owning ABC HOLDRS
for its own proprietary account as principal, will have the right to vote to
dissolve and liquidate the trust.
Distributions. You will be entitled to receive, net of trustee fees,
distributions of cash, including dividends, securities or property, if any, made
with respect to the underlying securities. The trustee will use its reasonable
efforts to ensure that it distributes these distributions as promptly as
practicable after the date on which it receives the distribution. Therefore,
you may receive your distributions substantially later than you would have had
you held the underlying securities directly. You will be obligated to pay any
tax or other charge that may become due with respect to ABC HOLDRS. The trustee
may deduct the amount of any tax or other governmental charge from a
distribution before making payment to you. In addition, the trustee will deduct
its quarterly custody fee of $2.00 for each round-lot of 100 ABC HOLDRS from
quarterly dividends, if any, paid to the trustee by the issuers of the
underlying securities. With respect to the aggregate custody fee payable in any
calendar year for each ABC HOLDR, the trustee will waive that portion of the fee
which exceeds the total cash dividends and other cash distributions received, or
to be received, and payable with respect to such calendar year.
Record dates. With respect to dividend payments and voting instructions,
the trustee expects to fix the trust's record dates as close as possible to the
record date fixed by the issuer of the underlying securities.
Shareholder communications. The trustee promptly will forward to you all
shareholder communications that it receives from issuers of the underlying
securities.
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<PAGE>
Withdrawal of underlying securities. You may surrender your ABC HOLDRS and
receive underlying securities during the trustee's normal business hours and
upon the payment of applicable fees, taxes or governmental charges, if any. You
should receive your underlying securities no later than the business day after
the trustee receives your request. If you surrender ABC HOLDRS in order to
receive underlying securities, you will pay to the trustee a cancellation fee of
up to $10.00 per round-lot of 100 ABC HOLDRS.
Further issuances of ABC HOLDRS. The depositary trust agreement provides
for further issuances of ABC HOLDRS on a continuous basis without your consent.
Reconstitution events. The depositary trust agreement provides for the
automatic distribution of underlying securities to you in four circumstances.
A. If an issuer of underlying securities no longer has a class
of common stock registered under section 12 of the
Securities Exchange Act of 1934, then its securities will no
longer be an underlying security and the trustee will
distribute the shares of that company to the owners of the
ABC HOLDRS.
B. If the SEC finds that an issuer of underlying securities
should be registered as an investment company under the
Investment Company Act of 1940, and the trustee has actual
knowledge of the SEC finding, then the trustee will
distribute the shares of that company to the owners of the
ABC HOLDRS.
C. If the underlying securities of an issuer cease to be
outstanding as a result of a merger, consolidation or other
corporate combination, the trustee will distribute the
consideration paid by and received from the acquiring
company to the beneficial owners of ABC HOLDRS, unless the
merger, consolidation or other corporate combination is
between companies that are already included in the ABC
HOLDRS and the consideration paid is additional underlying
securities. In this case, the additional underlying
securities will be deposited into the trust.
D. If an issuer's underlying securities are delisted from
trading on a national securities exchange or Nasdaq and are
not listed for trading on another national securities
exchange or through Nasdaq within five business days from
the date such securities are delisted.
If a reconstitution event occurs, the trustee will deliver the underlying
security to you as promptly as practicable after the date that the trustee has
knowledge of the occurrence of a reconstitution event.
Termination of the trust. The trust will terminate if the trustee resigns
and no successor trustee is appointed by Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as initial depositor, within 60 days from the date the trustee
provides notice to Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
initial depositor, of its intent to resign. Upon termination, the beneficial
owners of ABC HOLDRS will surrender their ABC HOLDRS as provided in the
depositary trust agreement, including payment of any fees of the trustee or
applicable taxes or governmental charges due in connection with delivery to the
owners of the underlying securities. The trust also will terminate if ABC
HOLDRS are delisted from the American Stock Exchange and are not listed for
trading on another national securities exchange or through Nasdaq within 5
business days from the date the ABC HOLDRS are delisted. Finally, the trust
will terminate if 75% of the owners of outstanding ABC HOLDRS other than Merrill
Lynch, Pierce, Fenner & Smith Incorporated vote to dissolve and liquidate the
trust.
If a termination event occurs, the trustee will distribute the underlying
securities to you as promptly as practicable after the termination event occurs.
Amendment of the depositary trust agreement. The trustee and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as initial depositor, may amend any
provisions of the depositary trust agreement without the consent of
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<PAGE>
any other depositor or any of the owners of the ABC HOLDRS. Promptly after the
execution of any amendment to the agreement, the trustee must furnish or cause
to be furnished written notification of the substance of the amendment to each
owner of ABC HOLDRS. Any amendment that imposes or increases any fees or
charges, subject to exceptions, or that otherwise prejudices any substantial
existing right of the owners of ABC HOLDRS will not become effective until 30
days after notice of the amendment is given to the owners of ABC HOLDRS.
Issuance and cancellation fees. After the initial public offering, the
trust expects to issue more ABC HOLDRS. If you wish to create ABC HOLDRS by
delivering to the trust the requisite underlying securities, the trustee will
charge you an issuance fee of up to $10.00 for each round-lot of 100 ABC HOLDRS.
If you wish to cancel your ABC HOLDRS and withdraw your underlying securities,
the trustee will charge you a cancellation fee of up to $10.00 for each round-
lot of 100 ABC HOLDRS issued. The trustee may negotiate either of these fees
depending on the volume, frequency and size of the issuance or cancellation
transactions.
Commissions. If you choose to create ABC HOLDRS after the conclusion of
the initial public offering, you will not be charged the underwriting fee.
However, in addition to the issuance and cancellation fees described above, you
will be responsible for paying any sales commissions associated with your
purchase of the underlying securities that is charged by your broker, whether it
be a member of the selling group or another broker.
Custody fees. The Bank of New York, as trustee and as custodian, will
charge you a quarterly custody fee of $2.00 for each round-lot of 100 ABC HOLDRS
to be deducted from any dividend payments or other cash distributions on
underlying securities received by the trustee. With respect to the aggregate
custody fee payable in any calendar year for each ABC HOLDR, the Trustee will
waive that portion of the fee which exceeds the total cash dividends and other
cash distributions received, or to be received, and payable with respect to such
calendar year. The trustee cannot recapture unpaid custody fees from prior
years.
Address of the trustee. The Bank of New York, ADR Department, 101 Barclay
Street, New York, New York 10286.
Governing law. The depositary trust agreement and ABC HOLDRS will be
governed by the laws of the State of New York. The trustee will provide the
depositary trust agreement to any owner of the underlying securities free of
charge upon written request.
Duties and immunities of the trustee. The trustee will assume no
responsibility or liability for, and makes no representations as to, the
validity or sufficiency, or as to the accuracy of the recitals, if any, set
forth in the ABC HOLDRS.
The trustee undertakes to perform only those duties as are specifically set
forth in the depositary trust agreement. Subject to the preceding sentence, the
trustee will be liable for its own negligence or misconduct except for good
faith errors in judgment so long as the trustee was not negligent in
ascertaining the relevant facts.
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<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
General
The following is a summary of the U.S. federal income tax consequences
relating to the ABC HOLDRS for:
. a citizen or resident of the United States;
. a corporation or partnership created or organized in the United States
or under the laws of the United States;
. an estate, the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source;
. or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more U.S. persons have the authority to control all substantial
decisions of the trust (each of the above, a ''U.S. receipt holder'');
and
. any person other than a U.S. receipt holder (a ''Non-U.S. receipt
holder'').
This summary is based upon laws, regulations, rulings and decisions
currently in effect, all of which are subject to change, possibly on a
retroactive basis. The discussion does not deal with all U.S. federal income
tax consequences applicable to all categories of investors, some of which may be
subject to special rules. In addition, this summary generally is limited to
investors who will hold the ABC HOLDRS as ''capital assets'' (generally,
property held for investment) within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended. We suggest that you consult with your own tax
advisor.
Taxation of the trust
The trust will provide for flow through tax consequences as it will be
treated as a grantor trust or custodial arrangement for U.S. federal income tax
purposes.
Taxation of ABC HOLDRS
A receipt holder purchasing and owning ABC HOLDRS will be treated, for U.S.
federal income tax purposes, as directly owning a proportionate share of the
underlying securities represented by ABC HOLDRS. Consequently, if there is a
taxable cash distribution on an underlying security, a holder will recognize
income with respect to the distribution at the time the distribution is received
by the trustee, not at the time that the holder receives the cash distribution
from the trustee.
A receipt holder will determine its initial tax basis in each of the
underlying securities by allocating the purchase price for the ABC HOLDRS among
the underlying securities based on their relative fair market values at the time
of purchase. Similarly, when a holder sells a receipt, it will determine the
amount realized with respect to each security by allocating the sales price
among the underlying securities based on their relative fair market values at
the time of sale. A holder's gain or loss with respect to each security will be
computed by subtracting its adjusted basis in the security from the amount
realized on the security. With respect to purchases of ABC HOLDRS for cash in
the secondary market, a receipt holder's aggregate tax basis in each of the
underlying securities will be equal to the purchase price of the ABC HOLDRS.
Similarly, with respect to sales of ABC HOLDRS for cash in the secondary market,
the amount realized with respect to a sale of ABC HOLDRS will be equal to the
aggregate amount realized with respect to each of the underlying securities.
The distribution of any securities by the trust upon the surrender of ABC
HOLDRS, the occurrence of a reconstitution event, or a termination event will
not be a taxable event, except the extent cash is distributed in
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<PAGE>
The distribution of any securities by the trust upon the surrender of ABC
HOLDRS, the occurrence of a reconstitution event, or a termination event will
not be a taxable event, except to the extent that cash is distributed in lieu of
fractional shares. The receipt holders holding period with respect to the
distributed securities will include the period that the holder held the
securities through the trust.
Brokerage fees and custodian fees
The brokerage fee incurred in purchasing a receipt will be treated as part
of the cost of the underlying securities. Accordingly, a holder includes this
fee in its tax basis in the underlying securities. A holder will allocate the
brokerage fee among the underlying securities using either a fair market value
allocation or pro rata based on the number of shares of each underlying
security. Similarly, the brokerage fee incurred in selling ABC HOLDRS will
reduce the amount realized with respect to the underlying securities.
A holder will be required to include in its income the full amount of
dividends paid on the underlying securities, even though the depositary trust
agreement provides that the custodian fees will be deducted directly from any
dividends paid. These custodian fees will be treated as an expense incurred in
connection with a holder's investment in the underlying securities and may be
deductible. If a holder is an individual, estate or trust, however, the
deduction of its share of custodian fees will be a miscellaneous itemized
deduction that may be disallowed in whole or in part.
Special considerations with respect to underlying securities of foreign issuers
With respect to underlying securities of foreign issuers, the gross amount
of any taxable cash distribution will not be eligible for the dividends received
deduction generally allowed to corporate U.S. receipt holders.
If a U.S. receipt holder receives a dividend in a currency other than in
U.S. dollars, the amount of the dividend for U.S. federal income tax purposes
will be the U.S. dollar value (determined at the spot rate on the date of such
payment) regardless of whether the payment is later converted into U.S. dollars.
In such case, the U.S. receipt holder may recognize ordinary income or loss as a
result of currency fluctuations between the date on which the dividend is paid
and the date the dividend amount is converted into U.S. dollars.
Subject to certain conditions and limitations, any foreign tax withheld on
dividends may be deducted from taxable income or credited against a U.S. receipt
holder's U.S. federal income tax liability. The limitation on foreign taxes
eligible for the U.S. foreign tax credit is calculated separately with respect
to specific classes of income. For this purpose, dividends distributed by a
foreign issuer generally will constitute "passive income" or, in the case of
certain U.S. holders, "financial services income." For purposes of the U.S.
foreign tax credit limitation, dividends received by a U.S. receipt holder with
respect to an underlying security of a foreign issuer generally will be treated
as foreign source income while any gain or loss recognized from the sale of such
security generally will be treated as from sources within the United States.
The rules relating to the determination of the foreign tax credit are complex
and U.S. receipt holders should consult their own tax advisors to determine
whether and to what extent a credit would be available.
Additionally, special U.S. federal income tax rules apply to U.S. persons
owning shares of a "passive foreign investment company" (a "PFIC"). We do not
believe that any of the foreign issuers of the underlying securities is
currently a PFIC and do not anticipate that any such issuer will become a PFIC
in the future, although no assurances can be made that the applicable tax law or
other relevant circumstances will not change in a manner which affects the PFIC
determination. A foreign corporation generally will be classified as a PFIC for
U.S. federal income tax purposes in any taxable year in which, after applying
certain look-through rules, either:
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<PAGE>
. at least 75 % of its gross income is "passive income"; or
. on average at least 50% of the gross value of its assets is
attributable to assets that produce
"passive income" or are held for the production of passive income.
Passive income for this purpose generally includes dividends, interest,
royalties, rents, and gains from commodities and securities transactions.
If a corporation were classified as a PFIC, a U.S. receipt holder could be
subject to increase tax liability (possibly including an interest charge) upon
the sale or other disposition of the ABC HOLDRS or of the underlying securities
or upon the receipt of "excess distributions", unless such U.S. receipt holder
elected to be taxed currently on its pro rata portion of the corporation's
income, whether or not such income was distributed in the form of dividends or
otherwise.
Non-U.S. receipt holders
A Non-U.S. receipt holder generally will be subject to U.S. withholding tax
at a rate of 30% or such lower rate as may be specified by an applicable tax
treaty with respect to dividends received on underlying securities of U.S.
issuers, unless that income is effectively connected with a U.S. trade or
business conducted by the holder or, where a tax treaty applies, is attributable
to a permanent establishment maintained in the United States by such holder, in
which case, those dividends will be exempt from withholding tax, provided the
holder complies with applicable certification and disclosure requirements.
A Non-U.S. receipt holder generally will not be subject to U.S. federal
income or withholding tax with respect to dividends received on underlying
securities of foreign issuers, unless that income is effectively connected with
a U.S. trade or business conducted by such holder or, where a tax treaty
applies, is attributable to a permanent establishment maintained in the United
States by such holder.
With respect to dividends of both U.S. and foreign issuers, a Non-U.S.
receipt holder's effectively connected or attributable dividends, net of certain
deductions and credits, will be subject to U.S. federal income taxation at the
same graduated rates applicable to U.S. persons. In addition to this graduated
tax, effectively connected or attributable dividends received by a corporate
Non-U.S. receipt holder may also be subject to a branch profits tax at a rate of
30% or such lower rate as may be specified by an applicable tax treaty.
A Non-U.S. receipt holder that is eligible for a reduced rate of
withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts withheld by filing an appropriate claim for refund with the Internal
Revenue Service.
A Non-U.S. receipt holder generally will not be subject to U.S. federal
income or withholding tax with respect to gain recognized upon the sale or other
disposition of ABC HOLDRS or of the underlying securities unless:
. that gain is effectively connected with a U.S. trade or business
conducted by the holder or, where a tax treaty applies, is
attributable to a permanent establishment maintained in the United
States by such holder, or
. in the case of any gain realized by an individual Non-U.S. receipt
holder, the holder is present in the United States for 183 days or
more in the taxable year of the sale or other disposition and certain
other conditions are met.
Effectively connected or attributable gains generally will be subject to
U.S. federal income taxation at the same graduated rates applicable to U.S.
persons, and may, in the case of a corporate Non-U.S. receipt holder, also be
subject to the branch profits tax. Non-U.S. receipt holders should consult
their own tax advisors to determine whether any applicable tax treaties provide
for different rules.
The preceding discussion does not address all aspects of U.S. federal
income taxation that may be relevant in light of a Non-U.S. receipt holder's or
an issuer's particular facts and circumstances. Investors should consult their
own tax advisors.
Backup withholding tax, withholding tax and information reporting requirements
Final U.S. Treasury Regulations relating to backup withholding, withholding
and information reporting have been issued that modify certain rules with
respect to payments made after December 31, 2000. Investors are urged to
consult their own tax advisors regarding the application of the backup
withholding, withholding and information reporting requirements, including the
new regulations, with respect to their particular circumstances.
ERISA CONSIDERATIONS
Any plan fiduciary which proposes to have a plan acquire ABC HOLDRS should
consult with its counsel with respect to the potential applicability of ERISA
and the Internal Revenue Code to this investment and whether any exemption would
be applicable and determine on its own whether all conditions have been
satisfied. Moreover, each plan fiduciary should determine whether, under the
general fiduciary standards of investment prudence and diversification, an
acquisition of ABC HOLDRS is appropriate for the plan, taking into account the
overall investment policy of the plan and the composition of the plan's
investment portfolio.
PLAN OF DISTRIBUTION
In accordance with the depositary trust agreement, the trust will issue to
Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Merrill Lynch, Pierce,
Fenner & Smith Incorporated will deposit the underlying securities to receive
ABC HOLDRS. The selling group proposes to offer the ABC HOLDRS to the public at
the offering price set forth on the cover page of this prospectus which includes
an underwriting fee of 2%. Merrill Lynch, Pierce, Fenner & Smith Incorporated
will provide ABC HOLDRS to [ ] at the public offering price, as set
forth on the cover page of this prospectus, less a concession that is not in
excess of [ ]%. The selling group may allow to certain dealers, and such
dealers may reallow, a discount on sales of ABC HOLDRS not in excess of [ ]% of
the public offering price, as set forth on the cover page of this prospectus. We
expect the trust to deliver the initial distribution of ABC HOLDRS against
deposit of the underlying securities in New York, New York on , 2000. After the
initial offering, the public offering price, concession and discount may be
changed. The trust will continue to issue ABC HOLDRS, in connection with
deposits of underlying securities. This offering is being made in compliance
with Conduct Rule 2810 of the National Association of Securities Dealers, Inc.
Accordingly, sales will not be made to a discretionary account without the prior
written approval of a purchaser of ABC HOLDRS.
Members of the selling group and their affiliates from time to time
provided investment banking and other financial services to certain of the
issuers of the underlying securities and expect in the future to provide these
services, for which they have received and will receive customary fees and
commissions. They also may have served as counterparties in other transactions
with certain of the issuers of the underlying securities.
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Merrill Lynch, Pierce, Fenner & Smith Incorporated has agreed to indemnify
the trustee against certain civil liabilities related to acts performed or not
performed by the trustee in accordance with the depositary trust agreement or
periodic reports filed or not filed with the SEC with respect to the ABC HOLDRS.
Should a court determine not to enforce the indemnification provision, Merrill
Lynch, Pierce, Fenner & Smith Incorporated also has agreed to contribute to
payments the trustee may be required to make with respect to such liabilities.
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LEGAL MATTERS
Legal matters, including the validity of the ABC HOLDRS will be passed upon
for Merrill Lynch, Pierce, Fenner & Smith Incorporated, the initial depositor
and the underwriter, by Shearman & Sterling, New York, New York. Shearman &
Sterling, as special U.S. tax counsel to the trust, also will render an opinion
regarding the material federal income tax consequences relating to the ABC
HOLDRS.
WHERE YOU CAN FIND MORE INFORMATION
Merrill Lynch, Pierce, Fenner & Smith Incorporated has filed a registration
statement on Form S-1 with the SEC covering the ABC HOLDRS. While this
prospectus is a part of the registration statement, it does not contain all the
exhibits filed as part of the registration statement. You should consider
reviewing the full text of those exhibits.
The registration statement is available over the Internet at the SEC's Web
site at http://www.sec.gov. You also may read and copy the registration
statement at the SEC's public reference rooms in Washington, D.C., New York, New
York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference rooms and their copy charges. Merrill
Lynch, Pierce, Fenner & Smith Incorporated will not and the trust may not be
subject to the requirements of the Exchange Act and accordingly may not file
periodic reports.
Because the common stock of the issuers of the underlying securities is
registered under the Exchange Act, the issuers of the underlying securities are
required to file periodically financial and other information specified by the
SEC. For more information about the issuers of the underlying securities,
information provided to or filed with the SEC by the issuers of the underlying
securities with respect to their registered securities can be inspected at the
SEC's public reference facilities or accessed through the SEC's Web site
referenced above. In addition, information regarding the issuers of the
underlying securities may be obtained from other sources including, but not
limited to, press releases, newspaper articles and other publicly disseminated
information.
The trust and the selling group and its affiliates are not affiliated with
the issuers of the underlying securities, and the issuers of the underlying
securities have no obligations with respect to ABC HOLDRS. This prospectus
relates only to ABC HOLDRS and does not relate to the common stock or other
securities of the issuers of the underlying securities. We have not made any
due diligence inquiries with respect to the issuers of the underlying securities
in connection with ABC HOLDRS. We make no representation that these publicly
available documents or any other publicly available information regarding the
issuers of the underlying securities are accurate or complete. Furthermore, we
cannot assure you that all events occurring prior to the date of this
prospectus, including events that would affect the accuracy or completeness of
the publicly available documents described in the preceding paragraph, that
would affect the trading price of the common stock of the issuers of the
underlying securities, and therefore the offering and trading prices of the ABC
HOLDRS, have been publicly disclosed.
22
<PAGE>
================================================================================
LOGO
[ ] Depositary Receipts
ABC HOLDRS /SM/ Trust
-----------------------------------------------
P R O S P E C T U S
-----------------------------------------------
Merrill Lynch & Co.
[ ]
, 2000
Until , 2000 (25 days after the date of this
prospectus), all dealers effecting transactions in the offered ABC HOLDRS,
whether or not participating in this distribution, may be required to deliver a
prospectus. This requirement is in addition to the obligations of dealers to
deliver a prospectus when acting as underwriters and with respect to unsold
allotments or subscriptions.
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered, other than underwriting
compensation, are as set forth below. Except for the registration fee payable
to the Securities and Exchange Commission, all such expenses are estimated:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................. $2,640
Printing and engraving expenses.....................................
Legal fees and expenses.............................................
Rating agency fees..................................................
Miscellaneous.......................................................
---------
Total................................................................. $
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware, as
amended, provides that under certain circumstances a corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation or is
or was serving at its request in such capacity in another corporation or
business association, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful.
Article XIV, Section 2 of the Restated Certificate of Incorporation of
Merrill Lynch, Pierce, Fenner & Smith Incorporated provides in effect that,
subject to certain limited exceptions, Merrill Lynch, Pierce, Fenner & Smith
Incorporated shall indemnify its directors and officers to the full extent
authorized or permitted by law.
The directors and officers of Merrill Lynch, Pierce, Fenner & Smith
Incorporated are insured under policies of insurance maintained by Merrill
Lynch, Pierce, Fenner & Smith Incorporated, subject to the limits of the
policies, against certain losses arising from any claim made against them by
reason of being or having been such directors or officers. In addition, Merrill
Lynch, Pierce, Fenner & Smith Incorporated has entered into contracts with all
of its directors providing for indemnification of such persons by Merrill Lynch,
Pierce, Fenner & Smith Incorporated to the full extent authorized or permitted
by law, subject to certain limited exceptions.
Item 16. Exhibits.
See Exhibit Index.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
II-1
<PAGE>
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of the prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(5) For purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(6) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to Item 15 of this
registration statement, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
hereby certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-1 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, on May 26, 2000.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: /s/ AHMASS L. FAKAHANY
-------------------------
Ahmass L. Fakahany
Senior Vice President and
Chief Financial Officer
II-3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Joseph Moglia and Stephen G. Bodurtha and each of
them, with full power to act without the other, his true and lawful attorneys-
in-fact and agents with full and several power of substitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments, including post-effective amendments, and supplements to this
Registration Statement, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully and to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on May 26, 2000.
Signature Title
--------- -----
/s/ JOHN L. STEFFENS
---------------------------
John L. Steffens Chief Executive Officer,
Chairman of the Board
and Director
/s/ STANLEY O'NEAL
---------------------------
E. Stanley O'Neal Director
/s/ GEORGE A SCHIEREN
---------------------------
George A. Schieren Director
/s/ THOMAS H PATRICK
---------------------------
Thomas H. Patrick Director
II-4
<PAGE>
/s/ AHMASS L. FAKAHANY
----------------------
Ahmass L. Fakahany Senior Vice President and
Chief Financial Officer
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibits
- --------
* 4.1 Standard Terms for Depositary Trust Agreements between Merrill Lynch,
Pierce, Fenner & Smith Incorporated and The Bank of Bank of New York, as
Trustee dated as of September 2, 1999, and included as exhibits thereto,
form of Depositary Trust Agreement and form of HOLDRS
* 5.1 Opinion of Shearman & Sterling regarding the validity of the ABC HOLDRS
Receipts
* 8.1 Opinion of Shearman & Sterling, as special U.S. tax counsel regarding
the material federal income tax consequences
24.1 Power of Attorney (included in Part II of Registration Statement)
_____________________________
* To be filed by amendment.
